President's spokesman: Ukraine's gas debt has nothing to do with EU agreement

Gazprom CEO Alexei Miller said the company was mulling prepayment for gas supplies to Ukraine because of its violation of terms of payment.

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Photo ITAR-TASS/ Denis Vyshinsky

MOSCOW, October 29 (Itar-Tass) - The topic of Ukraine's gas debt is not related to its plans to sign an association agreement with the European Union, Dmitry Peskov, spokesman for the Russian president said in response to the Itar-Tass question if Gazprom's statement could in any way be associated with the discussions at the summits in Minsk, Belarus, last week or to the meeting between the Russian and Ukrainian presidents in Sochi on Saturday.

"The topic of gas debts is certainly not among political issues and in no way relates to associated membership in the European Union," Peskov said.

He confirmed that the problem of debt for supplied Russian gas was indeed ripe and that it actually coincided in time with the discussions about the consequences for trade and economic relations between Kiev and Moscow as a result of Ukraine's signing the agreement with the EU.

The presidential spokesman reminded that Gazprom had shown "maximum flexibility" for a long time meeting its Ukrainian partners halfway.

"Yet the time comes when we have to clearly state our position, most importantly the date to pay debts," Peskov said.

Russia would certainly be opposed to any politicizing of financial and economic relations between Gazprom and Ukrainian partners, he added.

At the summits in Minsk last week, the participants discussed the ways of developing the Customs Union and the Supreme Eurasian Economic Council, and also reviewed these issues in the light of Ukraine's expected euro integration. The discussion continued at a separate meeting between the Russian and Ukrainian Presidents, Vladimir Putin and Viktor Yanukovich, in Sochi. "It is not known how actively the gas topic featured in the discussions between the Russian and Ukrainian leaders," Peskov noted.

On Tuesday, Gazprom CEO Alexei Miller said the company was mulling prepayment for gas supplies to Ukraine because of its violation of terms of payment.

"We're very concerned about the situation with Ukraine's payment for Russian gas supplies. We signed an additional agreement to the contract of gas deliveries worth 882 million dollars in August, which set a payment deadline of October 1," Miller said. "But October is drawing to an end, yet the gas bill remains unpaid, so the situation is very serious, taking into account the fact that the contract envisions the prepayment option in case of violation of terms."

He believes the issue has to be resolved urgently.

"In the recent time, Gazprom has repeatedly met Ukrainian colleagues halfway in the issues concerning contract terms," Miller went on. To ensure Naftogaz Ukrainy's timely and full payment for Russian gas, Gazprom paid an advance for gas transportation through Ukraine until January 2015. It also offered a significant discount, selling five billion cubic meters of gas to Ukraine at 269 U.S. dollars per 1,000 cubic meters, which made up a 0.5-billion-dollar discount.

Russia's National Energy Security Fund /FNEB/ said in an analytical note that in 2013, Ukraine's failure to take contracted Russian gas might result in a ten-billion-dollar fine. FNEB Deputy Director Alexei Grivach said Naftogaz was again violating the take or pay term under the contact and that it would receive a new bill from Gazprom.

"According to our estimates, Naftogaz is unlikely to buy more than 17 to 18 billion cubic meters of gas from Gazprom this year, with the contracted volume at 41.6 billion cubic meters," Grivach said.

"Failing to take the contracted volume would cost around ten billion dollars as the average contract price is at 410 dollars per 1,000 cubic meters," the expert added.